Fed Likely to Hold Rates, But Hike Odds Surge to 38% — SkimNews
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Federal Reserve is expected to keep its benchmark rate steady at 3.5%-3.75% at the July 29 FOMC meeting, marking a fifth consecutive hold, according to economists polled by FactSet.
- CME FedWatch shows the probability of a rate hike at the July meeting jumped to 38%, up from 12% just one week earlier, based on 30-day Fed funds futures pricing.
- Oil prices surged past $100 a barrel on Thursday amid the escalating U.S.-Iran conflict, prompting experts to warn that inflation could remain stubbornly elevated in the near term.
- Fed Chair Kevin Warsh has pledged to return inflation to the Fed's 2% target but declined to submit individual economic projections at the June meeting and has vowed to share less forward guidance than his predecessors.
- Nearly half of FOMC policymakers indicated at the June meeting they would support a rate hike later this year, while EY-Parthenon chief economist Gregory Daco called the rest-of-year outlook a "60-40 call" with September as the first real test of whether inflation's recent improvement holds.
- Forecasters' expectations have reversed since the start of 2026, when many anticipated at least one rate cut this year; resurgent inflation tied to energy prices has instead shifted the consensus toward potential rate hikes before year's end.
Why it matters: The swing from expecting rate cuts to pricing in a 38% chance of a July hike shows how oil topping $100 a barrel has reignited stagflation fears at the Fed. Warsh's refusal to offer forward guidance means markets and borrowers navigating mortgages, credit cards, and business loans get less policy clarity than under prior Fed leadership, while the split FOMC raises the odds that the next move is a hike rather than the cut most economists forecast at the start of the year.
Ask SkimNews
